Car Lease vs Buy Calculator
Should you lease or buy your next car? Compare total costs, monthly payments, and long-term value to make the best financial decision for your situation.
Car Lease vs Buy Calculator
Compare the total cost of leasing vs buying a vehicle
Buy Option
Lease Option
Comparison
Tip: Buying builds equity but costs more upfront. Leasing has lower payments but no ownership. Consider your driving habits and financial goals.
📚 Lease vs Buy: Complete Guide
🚗 Lease vs Buy: The Basics
Leasing is like renting—lower monthly payments but you own nothing at the end. Buying costs more monthly but builds equity and you own the car when the loan is paid off.
Quick rule: Lease if you want a new car every 3 years. Buy if you plan to keep it 5+ years.
💰 Total Cost of Ownership
Total cost includes monthly payments, down payment, insurance, maintenance, fees, and resale value (for buying). Over 5 years, buying is usually cheaper if you keep the car.
Example: $30K car over 5 years: Lease = $25K total cost, Buy = $22K (after resale value).
📉 Depreciation Impact
New cars lose 20-30% of value in the first year, 50-60% after 3 years. When you lease, the dealer absorbs this loss. When you buy, you do—but you can drive it longer to offset depreciation.
Tip: Buy a 2-3 year old car to avoid the steepest depreciation.
🔄 Equity Building
When you buy, each payment builds equity. After 5 years, you own a $15K-20K asset. With leasing, you make payments forever and own nothing—like renting an apartment vs buying a home.
Long-term: Buying and keeping a car 10+ years is the cheapest option.
📏 Mileage Limits & Fees
Leases typically allow 10,000-15,000 miles/year. Exceed this and you pay $0.15-$0.30 per extra mile. Drive 20,000 miles/year? That's $750-$1,500/year in overage fees.
Also: Excess wear-and-tear fees, early termination penalties, and disposition fees add up.
✅ When to Lease vs Buy
Lease if: You want a new car every 3 years, drive under 12K miles/year, value low monthly payments, or use it for business (tax write-off).
Buy if: You keep cars 5+ years, drive a lot, want to customize, or prefer long-term savings.
How to Use This Lease vs Buy Calculator
Enter Car Price & Down Payment
Input the car's purchase price and how much you can put down.
Add Lease & Loan Terms
Enter lease monthly payment, term, and money factor. For buying, add loan interest rate and term.
Compare Total Costs
Review 3-year and 5-year total costs, including depreciation and equity, to make your decision.
Frequently Asked Questions
Is it better to lease or buy a car?
It depends on your priorities. Leasing offers lower monthly payments and the ability to drive a new car every 3 years, but you build no equity and face mileage limits. Buying costs more upfront and monthly, but you own the car, can drive unlimited miles, and save money long-term if you keep it 5+ years. Lease if you value new cars and low payments. Buy if you want ownership and long-term savings.
What are the hidden costs of leasing?
Beyond monthly payments, leasing has: mileage overage fees ($0.15-$0.30/mile over limit), excess wear-and-tear charges (scratches, dents, tire wear), disposition fee ($300-$500 at lease end), early termination penalty (thousands if you end early), and acquisition fee ($500-$1,000 upfront). You also pay for gap insurance and have no equity. These hidden costs can add $2,000-$5,000 over a 3-year lease.
How does depreciation affect my decision?
New cars depreciate 20-30% in year 1, 50-60% after 3 years. When leasing, the dealer absorbs this loss—your payment covers the depreciation. When buying, you absorb it, but you can drive the car 5-10+ years to spread the cost. If you buy and sell after 3 years, you lose heavily to depreciation. If you keep it 10 years, depreciation per year is minimal. Buying used (2-3 years old) avoids the steepest depreciation.
Can I negotiate a lease like a purchase?
Yes! Many people don't realize the "cap cost" (lease price) is negotiable, just like a purchase price. Negotiate the cap cost down before discussing monthly payments. Also negotiate: money factor (lease interest rate—should be close to current loan rates), acquisition fee, and mileage allowance. Get quotes from multiple dealers. A $2,000 reduction in cap cost can save you $55/month on a 36-month lease. Always negotiate the price, not the payment.